Texas to edge out Virginia as world’s largest data center market, JLL report says

Texas is poised to overtake Virginia as the world’s largest data center market by 2030 as the demand for artificial intelligence leads to expansion and power constraints that reshape where and how North America’s digital systems get built.

The Lone Star State tops the list of sites to build powerful digital hubs because of the state’s plentiful land and energy, executives for real estate services firm JLL said in a newly released 2025 North America Data Center report. About 64% of the data center capacity under construction in North America is outside the traditional data center markets in areas such as West Texas, Tennessee, Wisconsin and Ohio.

Available data center space is at a record-low vacancy rate of 1% for the second year in a row.

“The Texas market has got access to more power supply than any other region,” Curt Holcomb, a managing director of JLL’s global data center team, told CoStar News, adding that access to power has spurred demand for data centers in the state.

The state’s abundance of power comes from solar and wind energy, as well as natural gas, making it a market leader for large data center users and developers, said Holcomb, who is based in Dallas. And these new and costly data center projects are “cash cows,” generating millions of dollars in tax revenue for municipalities, he added.

Texas accounts for 6.5 gigawatts of capacity under construction, supporting JLL’s projections that the state will overtake Virginia as the largest global data center market by 2030.

Northern Virginia has long been known as the world’s largest data center market ever since the commercial property type was measured by brokerages like JLL. But the power capacity in Virginia is constrained.

“There’s no shortage of land in Texas with it being such a big state,” Holcomb said. “The cost of land is a lot more economical, with superior transmission infrastructure and access to generation. In West Texas, there’s big solar arrays, wind farms and natural gas plants that make the area really attractive.”

Texas’ anticipated rise in the rankings for North America’s biggest data center markets comes as Virginia’s grid operator, PJM, has implemented stricter power management guidelines as unprecedented demand hits the state’s so-called data center alley.

That allows grid operators to cut power to data centers during emergencies before residents, forcing data centers to rely on backup generators. Texas grid operator ERCOT has similar authority during emergencies, with a growing number of data center developers seeking power solutions outside of the grid, such as solar and wind.

JLL’s report now tracks more than 40 new frontier markets with 39 gigawatts of active capacity throughout North America. About half of that is leased, with the other half being owned by large data center users like Google, Oracle and Amazon Web Services.

Other states, including Tennessee, Ohio and Wisconsin, are also capitalizing on abundant energy resources, ample land availability and business-friendly environment, the firm said.

For areas with infrastructure constraints, JLL said grid connection timelines are averaging four years or longer. This is forcing major tenants to secure capacity years in advance and driving the expansion into frontier markets with power availability.

JLL’s Andy Cvengros, an executive managing director at the firm and co-lead of U.S. Data Center Markets, said the sector “officially entered hyperdrive” with two consecutive years of record-low vacancy, providing compelling evidence against any AI bubble concerns.

The rush of technology and real estate firms to invest $1 trillion into data center projects sparked investor concerns of a potential AI bubble, as CoStar News reported. But JLL executives have said the scale and complexity of the projects are limiting what would otherwise be rapid growth.

Cvengros said nearly all of the massive construction pipeline being tracked by JLL is pre-committed by investment-grade tenants. He added that development headwinds are expected to keep vacancy near zero for several years.

Most tenants securing space today are contracting for construction to be completed in 2027 or 2028, JLL executives said, underscoring the depth and durability of forward demand. The available capacity of data center space is limited to small, fragmented blocks of space, offering little flexibility for big users to make large-scale deployments.

JLL is tracking more than 10 projects of 1 gigawatt or larger underway — a threshold that would’ve been “eye-popping” only a few years ago, the firm said.

The supply scarcity has driven robust rent growth, with JLL clocking data center rents having increased 9% in 2025. For listings greater than 1 megawatt, the firm said it is commanding premium increases of 13%.

JLL Global Head of Data Center Research Andrew Batson said in a statement that the firm is forecasting annual rent growth of 7% through 2030.

“With rents up 60% since 2020, landlords are capturing significant rent spreads on renewals while tenants continue to experience pronounced sticker shock on new leases,” Batson added. “Most leases being executed today include annual escalations of 3% or more, with little to no concessions.”